<PAGE>
                                                                      Exhibit 13

                             AMERICAN INCOME FUND I


                            AMERICAN INCOME FUND I-C,

                       a Massachusetts Limited Partnership


                Annual Report to the Partners, December 31, 1999
<PAGE>

                            AMERICAN INCOME FUND I-C,
                       a Massachusetts Limited Partnership

                     INDEX TO ANNUAL REPORT TO THE PARTNERS

                                                                            Page
                                                                            ----

SELECTED FINANCIAL DATA                                                        2

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS                                          3-8


FINANCIAL STATEMENTS:

Report of Independent Auditors                                                 9

Statement of Financial Position
at December 31, 1999 and 1998                                                 10

Statement of Operations
for the years ended December 31, 1999, 1998 and 1997                          11

Statement of Changes in Partners' Capital
for the years ended December 31, 1999, 1998 and 1997                          12

Statement of Cash Flows
for the years ended December 31, 1999, 1998 and 1997                          13

Notes to the Financial Statements                                          14-26


ADDITIONAL FINANCIAL INFORMATION:

Schedule of Excess (Deficiency) of Total Cash
Generated to Cost of Equipment Disposed                                       27

Statement of Cash and Distributable Cash
From Operations, Sales and Refinancings                                       28

Schedule of Costs Reimbursed to the General
Partner and its Affiliates as Required by
Section 9.4 of the Amended and Restated
Agreement and Certificate of Limited Partnership                              29
<PAGE>

                             SELECTED FINANCIAL DATA

      The following data should be read in conjunction with Management's
Discussion and Analysis of Financial Condition and Results of Operations and the
financial statements.

      For each of the five years in the period ended December 31, 1999:

<TABLE>
<CAPTION>
    Summary of
    Operations              1999           1998           1997           1996           1995
---------------------   ------------   ------------   ------------   ------------   ------------
<S>                     <C>            <C>            <C>            <C>            <C>
Lease revenue           $  2,174,523   $  2,463,373   $  4,068,381   $  4,130,156   $  4,648,578

Net income (loss)       $  1,190,252   $    623,010   $  1,574,944   $    552,157   $   (779,251)

Per Unit:
   Net income (loss)    $       1.41   $       0.74   $       1.86   $       0.65   $      (0.92)

   Cash distributions   $       0.75   $       0.75   $       0.94   $       1.38   $       2.00

 Financial Position
---------------------

Total assets            $ 11,182,585   $ 11,565,735   $ 12,142,868   $ 13,848,889   $ 12,687,300

Total long-term
obligations             $  2,363,628   $  3,459,289   $  4,401,753   $  6,547,519   $  4,574,713

Partners' capital       $  8,181,956   $  7,592,086   $  7,488,561   $  6,821,321   $  7,432,059
</TABLE>


                                       2
<PAGE>

                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS

             Year ended December 31, 1999 compared to the year ended
             December 31, 1998 and the year ended December 31, 1998
                  compared to the year ended December 31, 1997

   Certain statements in this annual report of American Income Fund I-C, a
Massachusetts Limited Partnership (the "Partnership") that are not historical
fact constitute "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995 and are subject to a variety of risks
and uncertainties. There are a number of factors that could cause actual results
to differ materially from those expressed in any forward-looking statements made
herein. These factors include, but are not limited to, the outcome of the Class
Action Lawsuit described in Note 8 to the accompanying financial statements and
the remarketing of the Partnership's equipment.

Overview

   The Partnership was organized in 1991 as a direct-participation equipment
leasing program to acquire a diversified portfolio of capital equipment subject
to lease agreements with third parties. Presently, the Partnership is a Nominal
Defendant in a Class Action Lawsuit, the outcome of which could significantly
alter the nature of the Partnership's organization and its future business
operations. See Note 8 to the accompanying financial statements. Pursuant to the
Amended and Restated Agreement and Certificate of Limited Partnership (the
"Restated Agreement, as amended"), the Partnership is scheduled to be dissolved
by December 31, 2002.

Year 2000 Issue

   The Partnership uses information systems provided by Equis Financial Group
Limited Partnership ("EFG") and has no information systems of its own. EFG
completed all Year 2000 readiness work prior to December 31, 1999 and did not
experience any significant problems. Additionally, EFG is not aware of any
outside customer or vendor that experienced a Year 2000 issue that would have a
material effect on the Partnership's results of operations, liquidity, or
financial position. However, EFG has no means of ensuring that all customers,
vendors and third-party servicers have conformed to Year 2000 standards. The
effect of this risk to the Partnership is not determinable.

Results of Operations

   For the year ended December 31, 1999, the Partnership recognized lease
revenue of $2,174,523 compared to $2,463,373 and $4,068,381 for the years ended
December 31, 1998 and 1997, respectively. The decrease in lease revenue from
1998 to 1999 reflects the effects of lease term expirations and equipment sales.
The decrease in lease revenue from 1997 to 1998 partially resulted from the
exchange of the Partnership's interest in a vessel during 1997 (see below). In
1997, the Partnership recognized lease revenue of $534,796 related to this
vessel, including $400,631 representing a prepayment of the remaining contracted
rent due under the vessel's lease agreement. Other reductions in lease revenue
form 1997 to 1998 resulted from lease term expirations and the sale of
equipment. In the future, lease revenue will continue to decline due to lease
term expirations and equipment sales.

   The Partnership's equipment portfolio includes certain assets in which the
Partnership holds a proportionate ownership interest. In such cases, the
remaining interests are owned by an affiliated equipment leasing program
sponsored by EFG. Proportionate equipment ownership enabled the Partnership to
further diversify its equipment portfolio at inception by participating in the
ownership of selected assets, thereby reducing the general levels of risk which
could have resulted from a concentration in any single equipment type, industry
or lessee. The Partnership and each affiliate individually report, in proportion
to their respective ownership interests, their respective shares of assets,
liabilities, revenues, and expenses associated with the equipment.


                                       3
<PAGE>

   Interest income for the year ended December 31, 1999 was $258,113 compared to
$195,264 and $86,836 for the years ended December 31, 1998 and 1997,
respectively. Interest income is generated principally from temporary investment
of rental receipts and equipment sale proceeds in short-term instruments.
Interest income included $45,973 in both 1999 and 1998 and $9,067 in 1997 earned
on a note receivable from Semele Group, Inc. ("Semele") (see Note 4 to the
accompanying financial statements). The note receivable from Semele is scheduled
to mature in April 2001. Interest income in 1999 also includes $32,745 related
to the National Steel Corporation settlement (see Note 8 to the accompanying
financial statements). The amount of future interest income is expected to
fluctuate as a result of changing interest rates and the amount of cash
available for investment, among other factors. See discussion below regarding on
investment made by the Partnership in 2000.

   During the year ended December 31, 1999, the Partnership sold equipment
having a net book value of $1,804 to existing lessees and third parties. These
sales resulted in a net gain, for financial statement purposes, of $508,592
compared to a net gain in 1998 of $119,724 on equipment having a net book value
of $15,660 and a net gain in 1997 of $652,413 on equipment having a net book
value of $359,061.

   In 1997, the Partnership also exchanged its interest in a vessel with an
original cost and net book value of $2,605,381 and $1,180,755, respectively (see
below and Note 4 to the accompanying financial statements). In connection with
this exchange, the Partnership realized proceeds of $802,431, which resulted in
a net loss, for financial statement purposes, of $378,324. In addition, as this
vessel was disposed of prior to the expiration of the related lease term, the
Partnership received prepayment of the remaining contracted rent due under the
vessel's lease agreement (see above).

   It cannot be determined whether future sales of equipment will result in a
net gain or a net loss to the Partnership, as such transactions will be
dependent upon the condition and type of equipment being sold and its
marketability at the time of sale. In addition, the amount of gain or loss
reported for financial statement purposes is partly a function of the amount of
accumulated depreciation associated with the equipment being sold.

   The ultimate realization of residual value for any type of equipment is
dependent upon many factors, including EFG's ability to sell and re-lease
equipment. Changing market conditions, industry trends, technological advances,
and many other events can converge to enhance or detract from asset values at
any given time. EFG attempts to monitor these changes in order to identify
opportunities which may be advantageous to the Partnership and which will
maximize total cash returns for each asset.

   The total economic value realized for each asset is comprised of all primary
lease term revenue generated from that asset, together with its residual value.
The latter consists of cash proceeds realized upon the asset's sale in addition
to all other cash receipts obtained from renting the asset on a re-lease,
renewal or month-to-month basis. The Partnership classifies such residual rental
payments as lease revenue. Consequently, the amount of gain or loss reported in
the financial statements is not necessarily indicative of the total residual
value the Partnership achieved from leasing the equipment.

   Depreciation expense was $956,631, $1,083,372 and $2,099,722 for the years
ended December 31, 1999, 1998 and 1997, respectively. For financial reporting
purposes, to the extent that an asset is held on primary lease term, the
Partnership depreciates the difference between (i) the cost of the asset and
(ii) the estimated residual value of the asset at the date of primary lease
expiration on a straight-line basis over such term. For the purposes of this
policy, estimated residual values represent estimates of equipment values at the
date of primary lease expiration. To the extent that equipment is held beyond
its primary lease term, the Partnership continues to depreciate the remaining
net book value of the asset on a straight-line basis over the asset's remaining
economic life.

   Interest expense was $222,725 or 10.2% of lease revenue in 1999, compared to
$318,530 or 12.9% of lease revenue in 1998 and $387,553 or 9.5% of lease revenue
in 1997. Interest expense in future periods will decline as the principal
balance of notes payable is reduced through the application of rent receipts to
outstanding debt.. See additional discussion below regarding the refinancing of
certain of the debt in 2000.


                                       4
<PAGE>

   Management fees were approximately 4.7% of lease revenue for the year ended
December 31, 1999, compared to 4.6% and 4.1% of lease revenue during the years
ended December 31, 1998 and 1997, respectively. Management fees are based on 5%
of gross lease revenue generated by operating leases and 2% of gross lease
revenue generated by full payout leases.

   Write-down of investment securities-affiliate was $185,281 for the year ended
December 31, 1998. The General Partner determined that the decline in market
value of its Semele common stock was other-than-temporary. As a result, the
Partnership wrote down the cost of the Semele common stock from $15 per share to
$4.125 per share (the quoted price of Semele stock on NASDAQ at December 31,
1998). See further discussion below.

   Operating expenses were $470,580, $454,908 and $200,670 for the years ended
December 31, 1999, 1998 and 1997, respectively. During 1999, the Partnership
accrued approximately $160,300 for the completion of a D-Check incurred to
facilitate the remarketing of the Finnair Aircraft having a lease agreement
which expired in January 2000 (see Note 9 to the accompanying financial
statements). Operating expenses in 1999 also include approximately $50,000
accrued for certain legal and Consolidation expenses related to the Class Action
Lawsuit described in Note 8 to the financial statements. During 1998, the
Partnership incurred or accrued approximately $298,000 for such expenses related
to the Class Action Lawsuit. Other operating expenses consist principally of
professional service costs, such as audit and other legal fees, as well as
printing, distribution and remarketing expenses. In certain cases, equipment
storage or repairs and maintenance costs may be incurred in connection with
equipment being remarketed.

Liquidity and Capital Resources and Discussion of Cash Flows

   In connection with a preliminary settlement agreement for the Class Action
Lawsuit described in Note 8 to the accompanying financial statements, the
Partnership is permitted to invest in new equipment or other business
activities, subject to certain limitations. On March 8, 2000, the Partnership
invested $2,780,000 in a debt instrument that matures in September 2002. (See
Notes 8 and 9 to the accompanying financial statements for additional
information concerning this transaction.)

   The Partnership by its nature is a limited life entity. As an equipment
leasing program, the Partnership's principal operating activities derive from
asset rental transactions. Accordingly, the Partnership's principal source of
cash from operations is provided by the collection of periodic rents. These cash
inflows are used to satisfy debt service obligations associated with leveraged
leases, and to pay management fees and operating costs. Operating activities
generated net cash inflows of $1,946,817, $2,165,077 and $3,241,188 for the
years ended December 31, 1999, 1998 and 1997 respectively. Net cash from
operating activities in 1997 included lease termination rents as described
above. Future renewal, re-lease and equipment sale activities will cause a
decline in the Partnership's lease revenues and corresponding sources of
operating cash. Overall, expenses associated with rental activities, such as
management fees, and net cash flow from operating activities will also continue
to decline as the Partnership experiences a higher frequency of remarketing
events.

   Cash realized from asset disposal transactions is reported under investing
activities on the accompanying Statement of Cash Flows. During 1999, the
Partnership realized net proceeds of $510,396, compared to $135,384 and
$1,041,030 in 1998 and 1997, respectively. Future inflows of cash from asset
disposals will vary in timing and amount and will be influenced by many factors
including, but not limited to, the frequency and timing of lease expirations,
the type of equipment being sold, its condition and age, and future market
conditions.

   At December 31, 1999, the Partnership was due aggregate future minimum lease
payments of $2,905,250 from contractual lease agreements (see Note 2 to the
financial statements), a portion of which will be used to amortize the principal
balance of notes payable of $2,363,628 (see Note 6 to the financial statements).
At the expiration of the individual primary and renewal lease terms underlying
the Partnership's future minimum lease payments, the Partnership will sell the
equipment or enter re-lease or renewal agreements when considered advantageous
by the General Partner and EFG. Such future remarketing activities will result
in the realization of additional cash inflows in the form of equipment sale
proceeds or rents from renewals and re-leases, the timing and extent of which
cannot be predicted with certainty. This is because the timing and extent of
remarketing


                                       5
<PAGE>

events often is dependent upon the needs and interests of the existing lessees.
Some lessees may choose to renew their lease contracts, while others may elect
to return the equipment. In the latter instances, the equipment could be
re-leased to another lessee or sold to a third party.

   In December 1998, the Partnership and certain affiliated investment programs
owning interests in two McDonnell Douglas MD-82 aircraft (collectively, the
"Programs") entered into lease extension agreements with Finnair OY. The lease
extensions, effective upon the expiration of the existing primary lease terms on
April 28, 1999, extended the leases for nine months and two years, respectively.
In aggregate, these lease extensions will provide additional lease revenue of
approximately $700,000 to the Partnership over the terms of the leases.

   The Partnership obtained long-term financing in connection with certain
equipment leases. The repayments of principal related to such indebtedness are
reported as a component of financing activities. Each note payable is recourse
only to the specific equipment financed and to the minimum rental payments
contracted to be received during the debt amortization period (which period
generally coincides with the lease rental term). As rental payments are
collected, a portion or all of the rental payment is used to repay the
associated indebtedness. In future years, the amount of cash used to repay debt
obligations is scheduled to decline as the principal balance of notes payable is
reduced through the collection and application of rents. However, the
Partnership has balloon payment obligations at the expiration of the lease terms
related to aircraft leased by Reno Air, Inc. of $679,276 and Finnair OY (see
below). On April 29, 1999, the Programs entered into agreements with a
third-party lender to extend the maturity dates of the Programs' indebtedness
related to the Finnair Aircraft. Consistent with the extension terms of the
lease agreements related to the Finnair Aircraft discussed above, the maturity
dates of the indebtedness were extended to January 2000 and April 2001,
respectively. The Partnership has balloon payment obligations of $399,502 and
$106,516 related to this indebtedness that is due on the respective maturity
dates. In February 2000, the Programs refinanced the indebtedness maturing in
January 2000 (see Note 9 to the accompanying financial statements). The Reno Air
indebtedness matures in January 2003.

   As a result of the vessel exchange in 1997 (see Results of Operations), the
Partnership became the beneficial owner of 208,764 shares of Semele common stock
(valued at $313,146 ($1.50 per share) at the time of the exchange transaction).
This investment was reduced by a dividend of $41,752 received in 1997
representing a return of equity to the Partnership. The Partnership also
received a beneficial interest in the Semele Note of $459,729 in connection with
the exchange. The Semele Note bears an annual interest rate of 10% and is
scheduled to mature in April 2001. The note also requires mandatory principal
reductions, if and to the extent that net proceeds are received by Semele from
the sale or refinancing of its Rancho Malibu property (see Note 4 to the
financial statements).

   On June 30, 1998, Semele effected a 1-for-300 reverse stock split followed by
a 30-for-1 forward stock split resulting in a reduction of the number of shares
of Semele common stock owned by the Partnership to 20,876 shares. During the
year ended December 31, 1998, the Partnership decreased the carrying value of
its investment in Semele common stock to $4.125 per share (the quoted price of
the Semele stock on NASDAQ at December 31, 1998) resulting in an unrealized loss
in 1998 of $70,460. In 1997, the Partnership recorded an unrealized loss of
$114,821 related to its Semele common stock. These losses were reported as
components of comprehensive income, included in partners' capital. At December
31, 1998, the General Partner determined that the decline in market value of the
Semele common stock was other-than-temporary. As a result, the Partnership wrote
down the cost of the Semele common stock to $4.125 per share for a total
realized loss of $185,281 in 1998. During the year ended December 31, 1999, the
Partnership increased the carrying value of its investment in Semele common
stock to $5.75 per share (the quoted price of the Semele stock on NASDAQ
SmallCap market at December 31, 1999), resulting in an unrealized gain of
$33,924. This gain was reported as a component of comprehensive income, included
in partners' capital.

   There are no formal restrictions under the Restated Agreement, as amended,
that materially limit the Partnership's ability to pay cash distributions,
except that the General Partner may suspend or limit cash distributions to
ensure that the Partnership maintains sufficient working capital reserves to
cover, among other things, operating costs and potential expenditures, such as
refurbishment costs to remarket equipment upon lease expiration. Liquidity is
especially important as the Partnership matures and sells equipment, because the
remaining equipment base consists of fewer revenue-producing assets that are
available to cover prospective


                                       6
<PAGE>

cash disbursements. Insufficient liquidity could inhibit the Partnership's
ability to sustain its operations or maximize the realization of proceeds from
remarketing its remaining assets.

   In particular, the Partnership must contemplate the potential liquidity risks
associated with its investment in commercial jet aircraft. The management and
remarketing of aircraft can involve, among other things, significant costs and
lengthy remarketing initiatives. Although the Partnership's lessees are required
to maintain the aircraft during the period of lease contract, repair,
maintenance, and/or refurbishment costs at lease expiration can be substantial.
For example, an aircraft that is returned to the Partnership meeting minimum
airworthiness standards, such as flight hours or engine cycles, nonetheless may
require heavy maintenance in order to bring its engines, airframe and other
hardware up to standards that will permit its prospective use in commercial air
transportation. At December 31, 1999, the Partnership had ownership interests in
six commercial jet aircraft. Three of the aircraft are Boeing 737 aircraft
formerly leased to Southwest Airlines, Inc. The lease agreements for each of
these aircraft expired on December 31, 1999 and Southwest elected to return the
aircraft. The aircraft are Stage 2 aircraft, meaning that they are prohibited
from operating in the United States after December 31, 1999 unless they are
retro-fitted with hush-kits to meet Stage 3 noise regulations promulgated by the
Federal Aviation Administration. The cost to hush-kit an aircraft, such as the
Partnership's Boeing 737s, can approach $2 million. At this time, the General
Partner is attempting to remarket these assets without further capital
investment by either re-leasing the aircraft to a user outside of the United
States or selling the aircraft as they are without retro-fitting the aircraft to
conform to Stage 3 standards. The remaining three aircraft in the Partnership's
portfolio already are Stage 3 compliant. One of these aircraft had a lease term
that expired in January 2000 and is being held in storage pending the outcome of
ongoing remarketing efforts. The final two aircraft in the Partnership's
portfolio have lease terms expiring in April 2001 and January 2003.

   Cash distributions to the General and Limited Partners have been declared and
generally paid within fifteen days following the end of each calendar quarter.
The payment of such distributions is presented as a component of financing
activities. For the year ended December 31, 1999, the Partnership declared total
cash distributions of Distributable Cash From Operations and Distributable Cash
From Sales and Refinancings of $634,306. In accordance with the Restated
Agreement, as amended, the Limited Partners were allocated 95% of these
distributions, or $602,590, and the General Partner was allocated 5%, or
$31,716. The fourth quarter 1999 cash distribution was paid on January 14, 2000.

   Cash distributions paid to the Limited Partners consist of both a return of
and a return on capital. Cash distributions do not represent and are not
indicative of yield on investment. Actual yield on investment cannot be
determined with any certainty until conclusion of the Partnership and will be
dependent upon the collection of all future contracted rents, the generation of
renewal and/or re-lease rents, and the residual value realized for each asset at
its disposal date.

   The Partnership's capital account balances for federal income tax and for
financial reporting purposes are different primarily due to differing treatments
of income and expense items for income tax purposes in comparison to financial
reporting purposes (generally referred to as permanent or timing differences;
see Note 7 to the financial statements). For instance, selling commissions and
organization and offering costs pertaining to syndication of the Partnership's
limited partnership units are not deductible for federal income tax purposes,
but are recorded as a reduction of partners' capital for financial reporting
purposes. Therefore, such differences are permanent differences between capital
accounts for financial reporting and federal income tax purposes. Other
differences between the bases of capital accounts for federal income tax and
financial reporting purposes occur due to timing differences. Such items consist
of the cumulative difference between income or loss for tax purposes and
financial statement income or loss, the difference between distributions
(declared vs. paid) for income tax and financial reporting purposes, and the
treatment of unrealized gains or losses on investment securities for book and
tax purposes. The principal component of the cumulative difference between
financial statement income or loss and tax income or loss results from different
depreciation policies for book and tax purposes.

   For financial reporting purposes, the General Partner has accumulated a
capital deficit at December 31, 1999. This is the result of aggregate cash
distributions to the General Partner being in excess of its capital contribution
of $1,000 and its allocation of financial statement net income or loss.
Ultimately, the existence of a capital deficit for


                                       7
<PAGE>

the General Partner for financial reporting purposes is not indicative of any
further capital obligations to the Partnership by the General Partner. The
Restated Agreement, as amended, requires that upon the dissolution of the
Partnership, the General Partner will be required to contribute to the
Partnership an amount equal to any negative balance which may exist in the
General Partner's tax capital account. At December 31, 1999, the General Partner
had a positive tax capital account balance.

   The outcome of the Class Action Lawsuit described in Note 8 to the
accompanying financial statements will be the principal factor in determining
the future of the Partnership's operations. The proposed settlement to that
lawsuit, if effected, will materially change the future organizational structure
and business interests of the Partnership, as well as its cash distribution
policies. In addition, commencing with the first quarter of 2000, the General
Partner believes that it will be in the Partnership's best interests to suspend
the payment of quarterly cash distributions pending final resolution of the
Class Action Lawsuit. Accordingly, future cash distributions are not expected to
be paid until the Class Action Lawsuit is adjudicated.


                                       8
<PAGE>

                         REPORT OF INDEPENDENT AUDITORS

To the Partners of American Income Fund I-C,
a Massachusetts Limited Partnership:

   We have audited the accompanying statements of financial position of American
Income Fund I-C, a Massachusetts Limited Partnership, as of December 31, 1999
and 1998, and the related statements of operations, changes in partners'
capital, and cash flows for each of the three years in the period ended December
31, 1999. These financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

   We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

   In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of American Income Fund I-C, a
Massachusetts Limited Partnership at December 31, 1999 and 1998, and the results
of its operations and its cash flows for each of the three years in the period
ended December 31, 1999, in conformity with accounting principles generally
accepted in the United States.

   Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The Additional Financial Information
identified in the Index to Annual Report to the Partners is presented for
purposes of additional analysis and is not a required part of the basic
financial statements. Such information has been subjected to the auditing
procedures applied in our audits of the basic financial statements and, in our
opinion, is fairly stated in all material respects in relation to the basic
financial statements taken as a whole.


                                                               ERNST & YOUNG LLP


Boston, Massachusetts
March 10, 2000


                                       9
<PAGE>

                            AMERICAN INCOME FUND I-C,
                       a Massachusetts Limited Partnership

                         STATEMENT OF FINANCIAL POSITION
                           December 31, 1999 and 1998

<TABLE>
<CAPTION>
                                                                1999            1998
                                                            ------------    ------------
<S>                                                         <C>             <C>
ASSETS

Cash and cash equivalents                                   $  3,970,877    $  3,243,631

Rents receivable                                                  92,215         361,283

Accounts receivable - affiliate                                  133,950          50,767

Note receivable - affiliate                                      459,729         459,729

Investment securities - affiliate                                120,037          86,113

Equipment at cost, net of accumulated
   depreciation of $7,486,725 and $8,610,088
   at December 31, 1999 and 1998, respectively                 6,405,777       7,364,212
                                                            ------------    ------------
     Total assets                                           $ 11,182,585    $ 11,565,735
                                                            ============    ============

LIABILITIES AND PARTNERS' CAPITAL

Notes payable                                               $  2,363,628    $  3,459,289
Accrued interest                                                  16,416          26,620
Accrued liabilities                                              386,918         259,500
Accrued liabilities - affiliate                                   17,783          14,751
Deferred rental income                                            57,307          54,912
Cash distributions payable to partners                           158,577         158,577
                                                            ------------    ------------

     Total liabilities                                         3,000,629       3,973,649
                                                            ------------    ------------
Partners' capital (deficit):
   General Partner                                              (473,442)       (502,935)
   Limited Partnership Interests
   (803,454.56 Units; initial purchase price of $25 each)      8,655,398       8,095,021
                                                            ------------    ------------

     Total partners' capital                                   8,181,956       7,592,086
                                                            ------------    ------------

     Total liabilities and partners' capital                $ 11,182,585    $ 11,565,735
                                                            ============    ============
</TABLE>

                   The accompanying notes are an integral part
                         of these financial statements.


                                       10
<PAGE>

                            AMERICAN INCOME FUND I-C,
                       a Massachusetts Limited Partnership

                             STATEMENT OF OPERATIONS
              for the years ended December 31, 1999, 1998 and 1997

                                              1999         1998         1997
                                          -----------  -----------  -----------

Income:

   Lease revenue                          $ 2,174,523  $ 2,463,373  $ 4,068,381

   Interest income                            212,140      149,291       77,769

   Interest income - affiliate                 45,973       45,973        9,067

   Gain on sale of equipment                  508,592      119,724      652,413

   Loss on exchange of equipment                   --           --     (378,324)
                                          -----------  -----------  -----------

      Total income                          2,941,228    2,778,361    4,429,306
                                          -----------  -----------  -----------

Expenses:

   Depreciation                               956,631    1,083,372    2,099,722

   Interest expense                           222,725      318,530      387,553

   Equipment management fees - affiliate      101,040      113,260      166,417
     Write-down of investment securities
     - affiliate                                   --      185,281           --

   Operating expenses - affiliate             470,580      454,908      200,670
                                          -----------  -----------  -----------

      Total expenses                        1,750,976    2,155,351    2,854,362
                                          -----------  -----------  -----------

Net income                                $ 1,190,252  $   623,010  $ 1,574,944
                                          ===========  ===========  ===========

Net income
   per limited partnership unit           $      1.41  $      0.74  $      1.86
                                          ===========  ===========  ===========

Cash distributions declared
   per limited partnership unit           $      0.75  $      0.75  $      0.94
                                          ===========  ===========  ===========

                   The accompanying notes are an integral part
                         of these financial statements.


                                       11
<PAGE>

                            AMERICAN INCOME FUND I-C,
                       a Massachusetts Limited Partnership

                    STATEMENT OF CHANGES IN PARTNERS' CAPITAL
              for the years ended December 31, 1999, 1998 and 1997

<TABLE>
<CAPTION>
                                                General           Limited Partners
                                                Partner      -------------------------
                                                 Amount         Units         Amount         Total
                                              -----------    -----------   -----------    -----------
<S>                                           <C>             <C>          <C>            <C>
Balance at December 31, 1996                  $  (541,473)    803,454.56   $ 7,362,794    $ 6,821,321

   Net income - 1997                               78,747             --     1,496,197      1,574,944

   Unrealized loss on investment securities        (5,741)            --      (109,080)      (114,821)
                                              -----------    -----------   -----------    -----------

Comprehensive income                               73,006             --     1,387,117      1,460,123
                                              -----------    -----------   -----------    -----------

Cash distributions declared                       (39,644)            --      (753,239)      (792,883)
                                              -----------    -----------   -----------    -----------
Balance at December 31, 1997                     (508,111)    803,454.56     7,996,672      7,488,561

   Net income - 1998                               31,151             --       591,859        623,010

   Unrealized loss on investment securities        (3,523)            --       (66,937)       (70,460)

   Less: Reclassification adjustment for
        write-down of investment securities         9,264             --       176,017        185,281
                                              -----------    -----------   -----------    -----------

Comprehensive income                               36,892             --       700,939        737,831
                                              -----------    -----------   -----------    -----------

Cash distributions declared                       (31,716)            --      (602,590)      (634,306)
                                              -----------    -----------   -----------    -----------

Balance at December 31, 1998                     (502,935)    803,454.56     8,095,021      7,592,086

   Net income - 1999                               59,513             --     1,130,739      1,190,252

   Unrealized gain on investment securities         1,696             --        32,228         33,924
                                              -----------    -----------   -----------    -----------

Comprehensive income                               61,209             --     1,162,967      1,224,176
                                              -----------    -----------   -----------    -----------

Cash distributions declared                       (31,716)            --      (602,590)      (634,306)
                                              -----------    -----------   -----------    -----------

Balance at December 31, 1999                  $  (473,442)    803,454.56   $ 8,655,398    $ 8,181,956
                                              ===========    ===========   ===========    ===========
</TABLE>

                   The accompanying notes are an integral part
                         of these financial statements.


                                       12
<PAGE>

                            AMERICAN INCOME FUND I-C,
                       a Massachusetts Limited Partnership

                             STATEMENT OF CASH FLOWS
              for the years ended December 31, 1999, 1998 and 1997

<TABLE>
<CAPTION>
                                                            1999           1998           1997
                                                        -----------    -----------    -----------
<S>                                                     <C>            <C>            <C>
Cash flows from (used in) operating activities:
Net income                                              $ 1,190,252    $   623,010    $ 1,574,944

Adjustments to reconcile net income
   to net cash from operating activities:
      Depreciation                                          956,631      1,083,372      2,099,722
      Gain on sale of equipment                            (508,592)      (119,724)      (652,413)
      Write-down of investment securities - affiliate            --        185,281             --
      Loss on exchange of equipment                              --             --        378,324

Changes in assets and liabilities:
   Decrease (increase) in:
      Rents receivable                                      269,068       (114,406)       222,213
      Accounts receivable - affiliate                       (83,183)       245,738       (206,966)
   Increase (decrease) in:
      Accrued interest                                      (10,204)        (3,848)       (49,284)
      Accrued liabilities                                   127,418        250,300        (13,550)
      Accrued liabilities - affiliate                         3,032        (14,174)        (4,142)
      Deferred rental income                                  2,395         29,528       (107,660)
                                                        -----------    -----------    -----------

         Net cash from operating activities               1,946,817      2,165,077      3,241,188
                                                        -----------    -----------    -----------

Cash flows from investing activities:
   Dividend received                                             --             --         41,752
   Proceeds from equipment sales                            510,396        135,384      1,041,030
                                                        -----------    -----------    -----------

         Net cash from investing activities                 510,396        135,384      1,082,782
                                                        -----------    -----------    -----------
Cash flows used in financing activities:
   Principal payments - notes payable                    (1,095,661)      (942,464)    (2,145,766)
   Distributions paid                                      (634,306)      (634,306)      (845,742)
                                                        -----------    -----------    -----------

         Net cash used in financing activities           (1,729,967)    (1,576,770)    (2,991,508)
                                                        -----------    -----------    -----------

Net increase in cash and cash equivalents                   727,246        723,691      1,332,462

Cash and cash equivalents at beginning of year            3,243,631      2,519,940      1,187,478
                                                        -----------    -----------    -----------

Cash and cash equivalents at end of year                $ 3,970,877    $ 3,243,631    $ 2,519,940
                                                        ===========    ===========    ===========

Supplemental disclosure of cash flow information:
   Cash paid during the year for interest               $   232,929    $   322,378    $   436,837
                                                        ===========    ===========    ===========
</TABLE>

Supplemental disclosure of non-cash investing and financing activities:
   See Note 4 to the financial statements regarding the Partnership's carrying
   value of its investment securities - affiliate.

                   The accompanying notes are an integral part
                         of these financial statements.


                                       13
<PAGE>

                            AMERICAN INCOME FUND I-C,
                       a Massachusetts Limited Partnership
                        Notes to the Financial Statements

                                December 31, 1999

NOTE 1 - ORGANIZATION AND PARTNERSHIP MATTERS

   American Income Fund I-C, a Massachusetts Limited Partnership (the
"Partnership") was organized as a limited partnership under the Massachusetts
Uniform Limited Partnership Act (the "Uniform Act") on March 1, 1991, for the
purpose of acquiring and leasing to third parties a diversified portfolio of
capital equipment. Partners' capital initially consisted of contributions of
$1,000 from the General Partner (AFG Leasing VI Incorporated) and $100 from the
Initial Limited Partner (AFG Assignor Corporation). On May 31, 1991, the
Partnership issued 803,454.56 units of limited partnership interests (the
"Units") to 909 investors. Included in the 803,454.56 units were 7,293.56 bonus
units. The Partnership's General Partner, AFG Leasing VI Incorporated, is a
Massachusetts corporation formed in 1990 and an affiliate of Equis Financial
Group Limited Partnership (formerly known as American Finance Group), a
Massachusetts limited partnership ("EFG"). The General Partner is not required
to make any other capital contributions except as may be required under the
Uniform Act and Section 6.1(b) of the Amended and Restated Agreement and
Certificate of Limited Partnership (the "Restated Agreement, as amended").

   Significant operations commenced on May 31, 1991 when the Partnership made
its initial equipment acquisition. Pursuant to the Restated Agreement, as
amended, Distributable Cash From Operations and Distributable Cash From Sales or
Refinancings will be allocated 95% to the Limited Partners and 5% to the General
Partner.

   Under the terms of a Management Agreement between the Partnership and EFG,
management services are provided by EFG to the Partnership at fees, which the
General Partner believes to be competitive, for similar services (see Note 5).

   EFG is a Massachusetts limited partnership formerly known as American Finance
Group ("AFG"). AFG was established in 1988 as a Massachusetts general
partnership and succeeded American Finance Group, Inc., a Massachusetts
corporation organized in 1980. EFG and its subsidiaries (collectively, the
"Company") are engaged in various aspects of the equipment leasing business,
including EFG's role as Manager or Advisor to the Partnership and several other
direct-participation equipment leasing programs sponsored or co-sponsored by EFG
(the "Other Investment Programs"). The Company arranges to broker or originate
equipment leases, acts as remarketing agent and asset manager, and provides
leasing support services, such as billing, collecting, and asset tracking.

   The general partner of EFG, with a 1% controlling interest, is Equis
Corporation, a Massachusetts corporation owned and controlled entirely by Gary
D. Engle, its President, Chief Executive Officer and sole Director. Equis
Corporation also owns a controlling 1% general partner interest in EFG's 99%
limited partner, GDE Acquisition Limited Partnership ("GDE LP"). Equis
Corporation and GDE LP were established in December 1994 by Mr. Engle for the
sole purpose of acquiring the business of AFG.

   In January 1996, the Company sold certain assets of AFG relating primarily to
the business of originating new leases, and the name "American Finance Group,"
and its acronym to a third party. AFG changed its name to Equis Financial Group
Limited Partnership after the sale was concluded. Pursuant to terms of the sale
agreements, EFG specifically reserved the rights to continue using the name
American Finance Group and its acronym in connection with the Partnership and
the Other Investment Programs and to continue managing all assets owned by the
Partnership and the Other Investment Programs.


                                       14
<PAGE>

                            AMERICAN INCOME FUND I-C,
                       a Massachusetts Limited Partnership
                        Notes to the Financial Statements

                                   (Continued)

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Statement of Cash Flows

   The Partnership considers liquid investment instruments purchased with a
maturity of three months or less to be cash equivalents. From time to time, the
Partnership invests excess cash with large institutional banks in federal agency
discount notes and repurchase agreements with overnight maturities. Under the
terms of the agreements, title to the underlying securities passes to the
Partnership. The securities underlying the agreements are book entry securities.
At December 31, 1999, the Partnership had $3,857,241 invested in federal agency
discount notes, repurchase agreements secured by U.S. Treasury Bills or
interests in U.S. Government securities, or other highly liquid overnight
investments.

Revenue Recognition

   Rents are payable to the Partnership monthly, quarterly or semi-annually and
no significant amounts are calculated on factors other than the passage of time.
The leases are accounted for as operating leases and are noncancellable. Rents
received prior to their due dates are deferred. In certain instances, the
Partnership may enter renewal or re-lease agreements which expire beyond the
Partnership's anticipated dissolution date. This circumstance is not expected to
prevent the orderly wind-up of the Partnership's business activities as the
General Partner and EFG would seek to sell the then-remaining equipment assets
either to the lessee or to a third party, taking into consideration the amount
of future noncancellable rental payments associated with the attendant lease
agreements. See also Note 8 regarding the Class Action Lawsuit. Future minimum
rents of $2,905,250 are due as follows:

   For the year ending December 31, 2000      $ 1,065,343
                                    2001          835,037
                                    2002          760,542
                                    2003          244,328
                                              -----------

                                   Total      $ 2,905,250
                                              ===========

   Revenue from major individual lessees which accounted for 10% or more of
lease revenue during the years ended December 31, 1999, 1998 and 1997 are as
follows:

                                              1999          1998          1997
                                            --------      --------      --------

Finnair OY                                  $507,521      $511,496      $511,496
Southwest Airlines, Inc.                    $416,708      $413,280      $413,280
Reno Air, Inc.                              $370,352      $375,103      $     --
General Motors Corporation                  $327,579      $329,924      $     --
Trans Ocean Corporation                     $     --      $279,106      $     --
Gearbulk Shipowning Ltd.                    $     --      $     --      $534,796
The Helen Mining Company                    $     --      $     --      $430,000


                                       15
<PAGE>

                            AMERICAN INCOME FUND I-C,
                       a Massachusetts Limited Partnership
                        Notes to the Financial Statements

                                   (Continued)

Use of Estimates

   The preparation of the financial statements in conformity with generally
accepted accounting principles requires the use of estimates and assumptions
that affect the amounts reported in the financial statements and accompanying
notes. Actual results could differ from those estimates.

Equipment on Lease

   All equipment was acquired from EFG, one of its Affiliates or from
third-party sellers. Equipment Cost means the actual cost paid by the
Partnership to acquire the equipment, including acquisition fees. Where
equipment was acquired from EFG or an Affiliate, Equipment Cost reflects the
actual price paid for the equipment by EFG or the Affiliate plus all actual
costs incurred by EFG or the Affiliate while carrying the equipment, including
all liens and encumbrances, less the amount of all primary term rents earned by
EFG or the Affiliate prior to selling the equipment. Where the seller of the
equipment was a third party, Equipment Cost reflects the seller's invoice price.

Depreciation

   The Partnership's depreciation policy is intended to allocate the cost of
equipment over the period during which it produces economic benefit. The
principal period of economic benefit is considered to correspond to each asset's
primary lease term, which term generally represents the period of greatest
revenue potential for each asset. Accordingly, to the extent that an asset is
held on primary lease term, the Partnership depreciates the difference between
(i) the cost of the asset and (ii) the estimated residual value of the asset on
a straight-line basis over such term. For purposes of this policy, estimated
residual values represent estimates of equipment values at the date of primary
lease expiration. To the extent that an asset is held beyond its primary lease
term, the Partnership continues to depreciate the remaining net book value of
the asset on a straight-line basis over the asset's remaining economic life.
Periodically, the General Partner evaluates the net carrying value of equipment
to determine whether it exceeds estimated net realizable value. Adjustments to
reduce the net carrying value of equipment are recorded in those instances where
estimated net realizable value is considered to be less than net carrying value.

   The ultimate realization of residual value for any type of equipment is
dependent upon many factors, including EFG's ability to sell and re-lease
equipment. Changing market conditions, industry trends, technological advances,
and many other events can converge to enhance or detract from asset values at
any given time.

Investment Securities - Affiliate

   The Partnership's investment in Semele Group, Inc. is considered to be
available-for-sale and as such is carried at fair value with unrealized gains
and losses reported as a component of comprehensive income (loss) included in
Partner's Capital. Other-than-temporary declines in market value are recorded as
write-down of investment in the Statement of Operations (see Note 4). Unrealized
gains or losses on the Partnership's available-for-sale securities, are required
to be included in comprehensive income. During the year ended December 31, 1999,
total comprehensive income amounted to $1,224,176.

Accrued Liabilities - Affiliate

   Unpaid operating expenses paid by EFG on behalf of the Partnership and
accrued but unpaid administrative charges and management fees are reported as
Accrued Liabilities - Affiliate (see Note 5).


                                       16
<PAGE>

                            AMERICAN INCOME FUND I-C,
                       a Massachusetts Limited Partnership
                        Notes to the Financial Statements

                                   (Continued)

Contingencies

   It is the Partnership's policy to recognize a liability for goods and
services during the period when the goods or services are received. To the
extent that the Partnership has a contingent liability, meaning generally a
liability the payment of which is subject to the outcome of a future event, the
Partnership recognizes a liability in accordance with Statement of Financial
Accounting Standards No. 5 "Accounting for Contingencies" ("SFAS No. 5"). SFAS
No. 5 requires the recognition of contingent liabilities when the amount of
liability can be reasonably estimated and the liability is likely to be
incurred.

   The Partnership is a Nominal Defendant in a Class Action Lawsuit. In 1998, a
settlement proposal to resolve that litigation was negotiated and remains
pending (see Note 8). The Partnership's estimated exposure for costs anticipated
to be incurred in pursuing the settlement proposal is approximately $348,000
consisting principally of legal fees and other professional service costs. These
costs are expected to be incurred regardless of whether the proposed settlement
ultimately is effected and, therefore, the Partnership accrued and expensed
approximately $298,000 of these costs in 1998 following the Court's approval of
the settlement plan. The cost estimate is subject to change and is monitored by
the General Partner based upon the progress of the settlement proposal and other
pertinent information. As a result, the Partnership accrued and expensed an
additional $50,000 for such costs during 1999.

Allocation of Profits and Losses

   For financial statement purposes, net income or loss is allocated to each
Partner according to their respective ownership percentages (95% to the Limited
Partners and 5% to the General Partner). See Note 7 for allocation of income or
loss for income tax purposes.

Net Income and Cash Distributions Per Unit

   Net income and cash distributions per Unit are based on 803,454.56 Units
outstanding during each of the three years in the period ended December 31, 1999
and computed after allocation of the General Partner's 5% share of net income
and cash distributions.

Provision for Income Taxes

   No provision or benefit from income taxes is included in the accompanying
financial statements. The Partners are responsible for reporting their
proportionate shares of the Partnership's taxable income or loss and other tax
attributes on their tax returns.

NOTE 3 - EQUIPMENT

   The following is a summary of equipment owned by the Partnership at December
31, 1999. Remaining Lease Term (Months), as used below, represents the number of
months remaining from December 31, 1999 under contracted lease terms and is
presented as a range when more than one lease agreement is contained in the
stated equipment category. A Remaining Lease Term equal to zero reflects
equipment either held for sale or re-lease or being leased on a month-to-month
basis. In the opinion EFG, the acquisition cost of the equipment did not exceed
its fair market value.


                                       17
<PAGE>

                            AMERICAN INCOME FUND I-C,
                       a Massachusetts Limited Partnership
                        Notes to the Financial Statements

                                   (Continued)

<TABLE>
<CAPTION>
                                   Remaining
                                   Lease Term     Equipment
        Equipment Type              (Months)       at Cost               Location
------------------------------     ----------    -----------    ---------------------------
<S>                                  <C>         <C>            <C>
Aircraft                              0-36       $ 8,318,862    NV/TX/Foreign
Materials handling                    0-24         2,898,375    CA/CO/GA/IA/IL/MI/MN/MO/NY/
                                                                OH/OR/PA/TX/Foreign
Trailers/intermodal containers       36-42         1,973,690    CA/OK
Retail store fixtures                    7           517,488    FL
Motor vehicles                           0            97,400    MI
Communications                           0            51,469    TX
Manufacturing                            0            35,218    MI
                                                 -----------

                      Total equipment cost        13,892,502

                  Accumulated depreciation        (7,486,725)
                                                 -----------

Equipment, net of accumulated depreciation       $ 6,405,777
                                                 ===========
</TABLE>

   In certain cases, the cost of the Partnership's equipment represents a
proportionate ownership interest. The remaining interests are owned by EFG or an
affiliated equipment leasing program sponsored by EFG. The Partnership and each
affiliate individually report, in proportion to their respective ownership
interests, their respective shares of assets, liabilities, revenues, and
expenses associated with the equipment. Proportionate equipment ownership
enabled the Partnership to further diversify its equipment portfolio at
inception by participating in the ownership of selected assets, thereby reducing
the general levels of risk which could have resulted from a concentration in any
single equipment type, industry or lessee. At December 31, 1999, the
Partnership's equipment portfolio included equipment having a proportionate
original cost of $10,810,044, representing approximately 78% of total equipment
cost.

   Certain of the equipment and related lease payment streams were used to
secure term loans with third-party lenders. The preceding summary of equipment
includes leveraged equipment having an original cost of approximately $6,218,000
and a net book value of approximately $4,811,000 at December 31, 1999 (see Note
6).

   Generally, the costs associated with maintaining, insuring and operating the
Partnership's equipment are incurred by the respective lessees pursuant to terms
specified in their individual lease agreements with the Partnership.

   As equipment is sold to third parties, or otherwise disposed of, the
Partnership recognizes a gain or loss equal to the difference between the net
book value of the equipment at the time of sale or disposition and the proceeds
realized upon sale or disposition. The ultimate realization of estimated
residual value in the equipment is dependent upon, among other things, EFG's
ability to maximize proceeds from selling or re-leasing the equipment upon the
expiration of the primary lease terms. The summary above includes equipment held
for re-lease or sale with an original cost of approximately $2,127,000 and a net
book value of approximately $746,000 at December 31, 1999. This equipment
includes the Partnership's interests in three Boeing 737 aircraft formerly
leased to Southwest Airlines. Each of these aircraft had an original cost of
approximately $700,350 and a net book value of approximately $248,500 at
December 31, 1999. The General Partner is actively seeking the sale or re-lease
of all equipment not on lease.


                                       18
<PAGE>

                            AMERICAN INCOME FUND I-C,
                       a Massachusetts Limited Partnership
                        Notes to the Financial Statements

                                   (Continued)

NOTE 4 - INVESTMENT SECURITIES - AFFILIATE / NOTE RECEIVABLE - AFFILIATE

   On April 30, 1997, the vessel partnerships, in which the Partnership and
certain affiliated investment programs are limited partners and through which
the Partnership and the affiliated investment programs shared economic interests
in three cargo vessels (the "Vessels") leased by Gearbulk Shipowning Ltd.
(formerly Kristian Gerhard Jebsen Skipsrederi A/S) (the "Lessee"), exchanged
their ownership interests in the Vessels for aggregate consideration of
$11,565,375, consisting of 1,987,000 newly issued shares (at $1.50 per share) of
common stock in Semele Group, Inc. ("Semele") (formerly Banyan Strategic Land
Fund II), a purchase money note of $8,219,500 (the "Note") and cash of $365,375.
Semele is a Delaware corporation organized on April 14, 1987 and has its common
stock listed on NASDAQ Small Cap Market effective January 5, 1999 (previously
NASDAQ). At the date of the exchange transaction, the common stock of Semele had
a net book value of approximately $1.50 per share and closing market value of
$1.00 per share. Semele has one principal real estate asset consisting of an
undeveloped 274 acre parcel of land near Malibu, California ("Rancho Malibu").

   The exchange was organized through an intermediary company (Equis Exchange
LLC, 99% owned by Semele and 1% owned by EFG), which was established for the
sole purpose of facilitating the exchange. There were no fees paid to EFG by
Equis Exchange LLC or Semele or by any other party that otherwise would not have
been paid to EFG had the Partnership sold its beneficial interest in the Vessels
directly to the Lessee. The Lessee prepaid all of its remaining contracted
rental obligations and purchased the Vessels in two closings occurring on May 6,
1997 and May 12, 1997. The Note was repaid with $3,800,000 of cash and delivery
of a $4,419,500 note from Semele (the "Semele Note").

   As a result of the exchange transaction and its original 33.85% beneficial
ownership interest in Dove Arrow, one of the three Vessels, the Partnership
received $430,187 in cash and became the beneficial owner of 208,764 shares of
Semele common stock (valued at $313,146 ($1.50 per share) at the time of the
exchange transaction) and received a beneficial interest in the Semele Note of
$459,729. The Semele Note bears an annual interest rate of 10% and is scheduled
to mature in April 2001. The note requires mandatory principal reductions, if
and to the extent that net proceeds are received by Semele from the sale or
refinancing of Rancho Malibu. The Partnership recognized interest income of
$45,973 in both 1999 and 1998 and $9,067 in 1997 related to the Semele Note. The
Partnership's interest in the vessel had an original cost and net book value of
$2,605,381 and $1,180,755, respectively. The proceeds realized by the
Partnership of $802,431 resulted in a net loss, for financial statement
purposes, of $378,324. In addition, as this vessel was disposed of prior to the
expiration of the related lease term, the Partnership received a prepayment of
the remaining contracted rent due under the vessel's lease agreement of
$400,631.

   Cash equal to the amount of the Semele Note was held in escrow for the
benefit of Semele in a segregated account pending the outcome of certain
shareholder proposals. Specifically, as part of the exchange, Semele sought
consent ("Consent") from its shareholders to: (1) amend its certificate of
incorporation and by-laws; (2) make additional amendments to restrict the
acquisition of its common stock in a way to protect Semele's net operating loss
carry-forwards, and (3) engage EFG to provide administrative services to Semele,
which services EFG will provide at cost. On October 21, 1997, such Consent was
obtained from Semele's shareholders. The Consent also allowed for (i) the
election of a new Board of Directors nominated by EFG for terms of up to three
years and an increase in size of the Board to as many as nine members, provided
a majority of the Board shall consist of members independent of Semele, EFG or
any affiliate; and (ii) an amendment extending Semele's life to perpetual and
changing its name from Banyan Strategic Land Fund II. Contemporaneously with the
Consent being obtained, Semele declared a $0.20 per share dividend to be paid on
all shares, including those beneficially owned by the Partnership. A dividend of
$41,752 was paid to the Partnership on November 17, 1997. This dividend
represented a return of equity to the Partnership, which proportionately reduced
the Partnership's investment in Semele. Subsequent to the exchange transaction,
Gary D. Engle, President and Chief Executive


                                       19
<PAGE>

                            AMERICAN INCOME FUND I-C,
                       a Massachusetts Limited Partnership
                        Notes to the Financial Statements

                                   (Continued)

Officer of EFG, was elected to the Board of Directors and appointed Chief
Executive Officer of Semele and James A. Coyne, Executive Vice President of EFG
was appointed Semele's President and Chief Operating Officer, and was elected to
the Board of Directors.

   On June 30, 1998, Semele effected a 1-for-300 reverse stock split followed by
a 30-for-1 forward stock split resulting in a reduction of the number of shares
of Semele common stock owned by the Partnership to 20,876 shares. In accordance
with the Financial Accounting Standard Board's Statement No. 115, Accounting for
Certain Investments in Debt and Equity Securities, marketable equity securities
classified as available-for-sale are required to be carried at fair value.
During the year ended December 31, 1998, the Partnership decreased the carrying
value of its investment in Semele common stock to $4.125 per share (the quoted
price of the Semele stock on NASDAQ at December 31, 1998) resulting in an
unrealized loss in 1998 of $70,460. In 1997, the Partnership recorded an
unrealized loss of $114,821 related to its Semele common stock. These losses
were reported as components of comprehensive income, included in partners'
capital. At December 31, 1998, the General Partner determined that the decline
in market value of the Semele common stock was other-than-temporary. As a
result, the Partnership wrote down the cost of the Semele common stock to $4.125
per share for a total realized loss of $185,281 in 1998. During the year ended
December 31, 1999, the Partnership increased the carrying value of its
investment in Semele common stock to $5.75 per share (the quoted price of the
Semele stock on NASDAQ SmallCap market at December 31, 1999), resulting in an
unrealized gain of $33,924. This gain was reported as a component of
comprehensive income, included in partners' capital.

NOTE 5 - RELATED PARTY TRANSACTIONS

   All operating expenses incurred by the Partnership are paid by EFG on behalf
of the Partnership and EFG is reimbursed at its actual cost for such
expenditures. Fees and other costs incurred during the years ended December 31,
1999, 1998 and 1997, which were paid or accrued by the Partnership to EFG or its
Affiliates, are as follows:

                                      1999             1998             1997
                                  ------------     ------------     ------------

Equipment management fees         $    101,040     $    113,260     $    166,417
Administrative charges                 124,602           68,052           63,870
Reimbursable operating expenses
   due to third parties                345,978          386,856          136,800
                                  ------------     ------------     ------------
                          Total   $    571,620     $    568,168     $    367,087
                                  ============     ============     ============

   As provided under the terms of the Management Agreement, EFG is compensated
for its services to the Partnership. Such services include acquisition and
management of equipment. For acquisition services, EFG was compensated by an
amount equal to 2.23% of Equipment Base Price paid by the Partnership. For
management services, EFG is compensated by an amount equal to 5% of gross
operating lease rental revenue and 2% of gross full payout lease rental revenue
received by the Partnership. Both acquisition and management fees are subject to
certain limitations defined in the Management Agreement.

   Administrative charges represent amounts owed to EFG, pursuant to Section
9.4(c) of the Restated Agreement, as amended, for persons employed by EFG who
are engaged in providing administrative services to the Partnership.
Reimbursable operating expenses due to third parties represent costs paid by EFG
on behalf of the Partnership which are reimbursed to EFG at actual cost.


                                       20
<PAGE>

                            AMERICAN INCOME FUND I-C,
                       a Massachusetts Limited Partnership
                        Notes to the Financial Statements

                                   (Continued)

   All equipment was purchased from EFG, one of its Affiliates or from
third-party sellers. The Partnership's Purchase Price is determined by the
method described in Note 2, Equipment on Lease.

   All rents and proceeds from the sale of equipment are paid directly to either
EFG or to a lender. EFG temporarily deposits collected funds in a separate
interest-bearing escrow account prior to remittance to the Partnership. At
December 31, 1999, the Partnership was owed $133,950 by EFG for such funds and
the interest thereon. These funds were remitted to the Partnership in January
2000.

   Certain affiliates of the General Partner own Units in the Partnership as
follows:

      ---------------------------------------------------------------------
                                             Number of     Percent of Total
                 Affiliate                  Units Owned   Outstanding Units
      ---------------------------------------------------------------------

      Atlantic Acquisition Limited
      Partnership                                16,536          2.06%
      ---------------------------------------------------------------------

      Old North Capital Limited
      Partnership                               124,065         15.44%
      ---------------------------------------------------------------------

   Atlantic Acquisition Limited Partnership ("AALP") and Old North Capital
Limited Partnership ("ONC") are both Massachusetts Limited Partnerships formed
in 1995 and affiliates of EFG. The general partners of AALP and ONC are
controlled by Gary Engle. In addition, the limited partnership interests of ONC
are owned by Semele. Gary D. Engle is Chairman and CEO of Semele.

NOTE 6 - NOTES PAYABLE

   Notes payable at December 31, 1999 consisted of installment notes of
$2,363,628 payable to banks and institutional lenders. The installment notes
bear interest rates ranging between 8.09% and 8.65%, except one note which bears
a fluctuating interest rate based on LIBOR plus a margin (6.4625% at December
31, 1999). All of the installment notes are non-recourse and are collateralized
by the equipment and assignment of the related lease payments. Generally, the
installment notes will be fully amortized by noncancellable rents. However, the
Partnership has balloon payment obligations at the expiration of the lease terms
related to aircraft leased by Reno Air, Inc. ($679,276) and Finnair OY ($399,502
and $106,516). The Finnair OY indebtedness matures in January 2000 and April
2001, respectively. The Reno Air indebtedness matures in January 2003. (See Note
9 regarding the refinancing of the January 2000 balloon payment in February
2000). The carrying amount of notes payable approximates fair value at December
31, 1999.

   The annual maturities of the installment notes payable are as follows:

   For the year ending December 31, 2000        $  908,630
                                    2001           473,531
                                    2002           302,191
                                    2003           679,276
                                                ----------

                                   Total        $2,363,628
                                                ==========


                                       21
<PAGE>

                            AMERICAN INCOME FUND I-C,
                       a Massachusetts Limited Partnership
                        Notes to the Financial Statements

                                   (Continued)

NOTE 7 - INCOME TAXES

   The Partnership is not a taxable entity for federal income tax purposes.
Accordingly, no provision for income taxes has been recorded in the accounts of
the Partnership.

   For financial statement purposes, the Partnership allocates net income or
loss to each class of partner according to their respective ownership
percentages (95% to the Limited Partners and 5% to the General Partner). This
convention differs from the income or loss allocation requirements for income
tax and Dissolution Event purposes as delineated in the Restated Agreement, as
amended. For income tax purposes, the Partnership allocates net income or net
loss in accordance with the provisions of such agreement. The Restated
Agreement, as amended, requires that upon dissolution of the Partnership, the
General Partner will be required to contribute to the Partnership an amount
equal to any negative balance which may exist in the General Partner's tax
capital account. At December 31, 1999, the General Partner had a positive tax
capital account balance.

   The following is a reconciliation between net income reported for financial
statement and federal income tax reporting purposes for the years ended December
31, 1999, 1998 and 1997:

<TABLE>
<CAPTION>
                                           1999             1998             1997
                                       ------------     ------------     ------------
<S>                                    <C>              <C>              <C>
Net income                             $  1,190,252     $    623,010     $  1,574,944

   Financial statement depreciation
     less than tax depreciation            (606,172)        (741,889)        (244,130)
   Deferred rental income                     2,395           29,528         (107,660)
   Other                                      5,435          193,981         (445,123)
                                       ------------     ------------     ------------

Net income for federal income tax
   reporting purposes                  $    591,910     $    104,630     $    778,031
                                       ============     ============     ============
</TABLE>

   The principal component of "Other" consists of the difference between the tax
and financial statement gain or loss on equipment disposals.

   The following is a reconciliation between partners' capital reported for
financial statement and federal income tax reporting purposes for the years
ended December 31, 1999 and 1998:

<TABLE>
<CAPTION>
                                                                          1999           1998
                                                                      -----------    -----------
<S>                                                                   <C>            <C>
Partners' capital                                                     $ 8,181,956    $ 7,592,086

   Add back selling commissions and organization
     and offering costs                                                 2,234,203      2,234,203

   Unrealized gain on investment securities                               (33,924)            --

   Financial statement distributions in excess of tax distributions            --          7,929

   Cumulative difference between federal income tax
     and financial statement income (loss)                             (2,470,977)    (1,872,635)
                                                                      -----------    -----------
Partners' capital for federal income tax reporting purposes           $ 7,911,258    $ 7,961,583
                                                                      ===========    ===========
</TABLE>


                                       22
<PAGE>

                            AMERICAN INCOME FUND I-C,
                       a Massachusetts Limited Partnership
                        Notes to the Financial Statements

                                   (Continued)

   Unrealized gain on investment securities, financial statement distributions
in excess of tax distributions and cumulative difference between federal income
tax and financial statement income (loss) represent timing differences.

NOTE 8 - LEGAL PROCEEDINGS

   In January 1998, certain plaintiffs (the "Plaintiffs") filed a class and
derivative action, captioned Leonard Rosenblum, et al. v. Equis Financial Group
Limited Partnership, et al., in the United States District Court for the
Southern District of Florida (the "Court") on behalf of a proposed class of
investors in 28 equipment leasing programs sponsored by EFG, including the
Partnership (collectively, the "Nominal Defendants"), against EFG and a number
of its affiliates, including the General Partner, as defendants (collectively,
the "Defendants"). Certain of the Plaintiffs, on or about June 24, 1997, had
filed an earlier derivative action, captioned Leonard Rosenblum, et al. v. Equis
Financial Group Limited Partnership, et al., in the Superior Court of the
Commonwealth of Massachusetts on behalf of the Nominal Defendants against the
Defendants. Both actions are referred to herein collectively as the "Class
Action Lawsuit".

   The Plaintiffs have asserted, among other things, claims against the
Defendants on behalf of the Nominal Defendants for violations of the Securities
Exchange Act of 1934, common law fraud, breach of contract, breach of fiduciary
duty, and violations of the partnership or trust agreements that govern each of
the Nominal Defendants. The Defendants have denied, and continue to deny, that
any of them have committed or threatened to commit any violations of law or
breached any fiduciary duties to the Plaintiffs or the Nominal Defendants.

   On July 16, 1998, counsel for the Defendants and the Plaintiffs executed a
Stipulation of Settlement setting forth terms pursuant to which a settlement of
the Class Action Lawsuit is intended to be achieved and which, among other
things, is expected to reduce the burdens and expenses attendant to continuing
litigation. The Stipulation of Settlement was preliminarily approved by the
Court on August 20, 1998 when the Court issued its "Order Preliminarily
Approving Settlement, Conditionally Certifying Settlement Class and Providing
for Notice of, and Hearing on, the Proposed Settlement" (the "August 20 Order").

   On March 12, 1999, counsel for the Plaintiffs and the Defendants entered into
an amended stipulation of settlement (the "Amended Stipulation") which was filed
with the Court on March 12, 1999. The Amended Stipulation was preliminarily
approved by the Court by its "Modified Order Preliminarily Approving Settlement,
Conditionally Certifying Settlement Class and Providing For Notice of, and
Hearing On, the Proposed Settlement" dated March 22, 1999 (the "March 22
Order"). The Amended Stipulation, among other things, divided the Class Action
Lawsuit into two separate sub-classes that could be settled individually. On May
26, 1999, the Court issued an Order and Final Judgment approving settlement of
one of the sub-classes. Settlement of the second sub-class, involving the
Partnership and 10 affiliated partnerships (collectively referred to as the
"Exchange Partnerships"), remains pending due, in part, to the complexity of the
proposed settlement pertaining to this class.

   In February 2000, counsel for the Plaintiffs and the Defendants entered into
a second amended stipulation of settlement (the "Second Amended Stipulation")
which modified certain of the settlement terms contained in the Amended
Stipulation. The Second Amended Stipulation was preliminarily approved by the
Court by its "Second Modified Order Preliminarily Approving Settlement,
Conditionally Certifying Settlement Class and Providing For Notice of, and
Hearing On, the Proposed Settlement" dated March 6, 2000 (the "March 2000
Order"). Prior to issuing a final order approving the settlement of the second
sub-class involving the Partnership, the Court will hold a fairness hearing that
will be open to all interested parties and permit any party to object to the
settlement. The investors of the Partnership and all other plaintiff sub-class
members will receive a Notice of Settlement and other information pertinent to
the settlement of their claims that will be mailed to them in advance of the
fairness hearing.


                                       23
<PAGE>

                            AMERICAN INCOME FUND I-C,
                       a Massachusetts Limited Partnership
                        Notes to the Financial Statements

                                   (Continued)

   The settlement of the second sub-class is premised on the consolidation of
the Exchange Partnerships' net assets (the "Consolidation"), subject to certain
conditions, into a single successor company ("Newco"). Under the proposed
Consolidation, the partners of the Exchange Partnerships would receive both
common stock in Newco and a cash distribution; and thereupon the Exchange
Partnerships would be dissolved. In addition, EFG would contribute certain
management contracts, operations personnel, and business opportunities to Newco
and cancel its current management contracts with all of the Exchange
Partnerships. Newco would operate principally as a finance company and would use
its best efforts to list its shares on the NASDAQ National Market or another
national exchange or market as soon after the Consolidation as Newco deems that
market conditions and its business operations are suitable for listing its
shares and Newco has satisfied all necessary regulatory and listing
requirements. The potential benefits and risks of the Consolidation will be
presented in a Solicitation Statement that will be mailed to all of the partners
of the Exchange Partnerships as soon as the associated regulatory review process
is completed and at least 60 days prior to the fairness hearing. A preliminary
Solicitation Statement was filed with the Securities and Exchange Commission on
August 24, 1998 and remains pending. Class members will be notified of the
actual fairness hearing date when it is confirmed.

   One of the principal objectives of the Consolidation is to create a company
that would have the potential to generate more value for the benefit of existing
limited partners than other alternatives, including continuing the Partnership's
customary business operations until all of its assets are disposed in the
ordinary course of business. To facilitate the realization of this objective,
the Amended Stipulation provided, among other things, that commencing March 22,
1999, the Exchange Partnerships could collectively invest up to 40% of the total
aggregate net asset values of all of the Exchange Partnerships in any
investment, including additional equipment and other business activities that
the general partners of the Exchange Partnerships and EFG reasonably believed to
be consistent with the anticipated business interests and objectives of Newco,
subject to certain limitations. The Second Amended Stipulation, among other
things, quantified the 40% limitation using a whole dollar amount of $32 million
in the aggregate.

   On March 8, 2000, the Exchange Partnerships collectively invested $32
million as permitted by the Second Amended Stipulation approved by the Court.
The Partnership's portion of the aggregate investment is $2,780,000. The
investment consists of a term loan to Echelon Residential Holdings LLC, a
newly-formed real estate development company that will be owned by several
investors, including James A. Coyne, Executive Vice President of EFG. Mr.
Coyne, in his individual capacity, is the only investor in Echelon
Residential Holdings LLC who is related to EFG. The loan proceeds were used
by Echelon Residential Holdings LLC in the formation of a subsidiary, Echelon
Residential LLC, that in turn acquired various real estate assets from
Echelon International Corporation, a Florida based real estate company. The
loan has a term of 30 months maturing on September 7, 2002 and bears interest
at the annual rate of 14% for the first 24 months and 18% for the final six
months of the term. Interest accrues and compounds monthly but is not payable
until maturity. Echelon Residential Holdings LLC has pledged a security
interest in all of its right, title and interest in and to its membership
interests in Echelon Residential LLC to the Exchange Partnerships as
collateral.

   In the absence of the Court's authorization to enter into new investment
activities, the Partnership's Restated Agreement, as amended, would not permit
such activities without the approval of limited partners owning a majority of
the Partnership's outstanding Units. Consistent with the Amended Stipulation,
the Second Amended Stipulation provides terms for unwinding any new investment
transactions in the event that the Consolidation is not effected or the
Partnership objects to its participation in the Consolidation.

   The Second Amended Stipulation, as well as the Amended Stipulation and the
original Stipulation of Settlement, prescribe certain conditions necessary to
effect a final settlement, including providing the partners of the Exchange
Partnerships with the opportunity to object to the participation of their
partnership in the


                                       24
<PAGE>

                            AMERICAN INCOME FUND I-C,
                       a Massachusetts Limited Partnership
                        Notes to the Financial Statements

                                   (Continued)

Consolidation. Assuming the proposed settlement is effected according to present
terms, the Partnership's share of legal fees and expenses related to the Class
Action Lawsuit and the Consolidation is estimated to be approximately $348,000,
of which approximately $298,000 was accrued and expensed by the Partnership in
1998 and approximately $50,000 was accrued and expensed in 1999.

   While the Court's August 20 Order enjoined certain class members, including
all of the partners of the Partnership, from transferring, selling, assigning,
giving, pledging, hypothecating, or otherwise disposing of any Units pending the
Court's final determination of whether the settlement should be approved, the
March 22 Order permitted the partners to transfer Units to family members or as
a result of the divorce, disability or death of the partner. No other transfers
are permitted pending the Court's final determination of whether the settlement
should be approved. The provision of the August 20 Order which enjoined the
General Partners of the Exchange Partnerships from, among other things,
recording any transfers not in accordance with the Court's order remains
effective.

   There can be no assurance that settlement of the sub-class involving the
Exchange Partnerships will receive final Court approval and be effected. There
also can be no assurance that all or any of the Exchange Partnerships will
participate in the Consolidation because if limited partners owning more than
one-third of the outstanding Units of a partnership object to the Consolidation,
then that partnership will be excluded from the Consolidation. Notwithstanding
the extent of delays experienced thus far in achieving a final settlement of the
Class Action Lawsuit with respect to the Exchange Partnerships, the General
Partner and its affiliates, in consultation with counsel, continue to feel that
there is a reasonable basis to believe that a final settlement of the sub-class
involving the Exchange Partnerships ultimately will be achieved. However, in the
absence of a final settlement approved by the Court, the Defendants intend to
defend vigorously against the claims asserted in the Class Action Lawsuit.
Neither the General Partner nor its affiliates can predict with any degree of
certainty the cost of continuing litigation to the Partnership or the ultimate
outcome.

   In addition to the foregoing, the Partnership is a party to other lawsuits
that have arisen out of the conduct of its business, principally involving
disputes or disagreements with lessees over lease terms and conditions as
described below:

Action involving National Steel Corporation

   EFG, on behalf of the Partnership and certain affiliated investment programs
(collectively, the "Plaintiffs"), filed an action in the Commonwealth of
Massachusetts Superior Court, Department of the Trial Court in and for the
County of Suffolk on July 27, 1995, for damages and declaratory relief against a
lessee of the Partnership, National Steel Corporation ("National Steel"). The
Complaint sought reimbursement from National Steel of certain sales and/or use
taxes paid to the State of Illinois in connection with equipment leased by
National Steel from the Plaintiffs and other remedies provided under the Master
Lease Agreement ("MLA"). On August 30, 1995, National Steel filed a Notice of
Removal, which removed the case to United States District Court, District of
Massachusetts. On September 7, 1995, National Steel filed its Answer to the
Plaintiff's Complaint along with Affirmative Defenses and Counterclaims and
sought declaratory relief, alleging breach of contract, implied covenant of good
faith and fair dealing, and specific performance. The Plaintiffs filed an Answer
to National Steel's Counterclaims on September 29, 1995. The parties discussed
settlement with respect to this matter for some time; however, the negotiations
were unsuccessful. The Plaintiffs filed an Amended and Supplemental Complaint
alleging further default under the MLA and filed a motion for Summary Judgment
on all claims and Counterclaims. The Court held a hearing on the Plaintiff's
motion in December 1997 and later entered a decision dismissing certain of
National Steel's Counterclaims, finding in favor of the Plaintiffs on certain
issues and in favor of National Steel on other issues. On May 11, 1999, the
parties executed a comprehensive settlement agreement to resolve all outstanding


                                       25
<PAGE>

                            AMERICAN INCOME FUND I-C,
                       a Massachusetts Limited Partnership
                        Notes to the Financial Statements

                                   (Continued)

issues, including reimbursement to the Partnership for the disputed sales tax
items referenced above. This matter did not have a material effect on the
Partnership's financial position or results of operations.

NOTE 9 - SUBSEQUENT EVENTS

Refinancing of Indebtedness

   In February 2000, the Partnership and certain affiliated investment programs
(collectively, the "Programs") refinanced the indebtedness maturing in January
2000 associated with the McDonnell-Douglas MD-82 aircraft formerly leased to
Finnair OY. The Programs received debt proceeds of $4,720,000 in aggregate,
consisting of $3,370,000 to refinance the existing indebtedness and an
additional $1,350,000 required to perform a D-Check on the aircraft. The note
bears a fluctuating interest rate based on LIBOR plus a margin with interest
payments due monthly. The Partnership's share of the indebtedness is $560,358
which is due at maturity on August 9, 2000. The aircraft was returned in January
2000 upon its lease term expiration and is currently being stored in a
warehouse.

Other

   On March 8, 2000, the Exchange Partnerships (see Note 8) collectively loaned
$32 million to Echelon Residential Holdings LLC, a newly-formed real estate
development company that will be owned by several investors, including James A.
Coyne, Executive Vice President of EFG. Mr. Coyne, in his individual capacity,
is the only investor in Echelon Residential Holdings LLC who is related to EFG.

   The Partnership's participation in the loan is $2,780,000. Echelon
Residential Holdings LLC, through a subsidiary (Echelon Residential LLC),
used the loan proceeds to acquire various real estate assets from Echelon
International Corporation, a Florida based real estate company. The loan has
a term of 30 months maturing on September 7, 2002 and bears interest at the
annual rate of 14% for the first 24 months and 18% for the final six months
of the term. Interest accrues and compounds monthly but is not payable until
maturity. In connection with the transaction, Echelon Residential Holdings
LLC has pledged a security interest in all of its right, title and interest
in and to its membership interests in Echelon Residential LLC to the Exchange
Partnerships as collateral.

                                       26
<PAGE>

                        ADDITIONAL FINANCIAL INFORMATION
<PAGE>

                            AMERICAN INCOME FUND I-C,
                       a Massachusetts Limited Partnership

         SCHEDULE OF EXCESS (DEFICIENCY) OF TOTAL CASH GENERATED TO COST
                              OF EQUIPMENT DISPOSED

              for the years ended December 31, 1999, 1998 and 1997

   The Partnership classifies all rents from leasing equipment as lease revenue.
Upon expiration of the primary lease terms, equipment may be sold, rented on a
month-to-month basis or re-leased for a defined period under a new or extended
lease agreement. The proceeds generated from selling or re-leasing the
equipment, in addition to any month-to-month revenue, represent the total
residual value realized for each item of equipment. Therefore, the financial
statement gain or loss, which reflects the difference between the net book value
of the equipment at the time of sale or disposition and the proceeds realized
upon sale or disposition may not reflect the aggregate residual proceeds
realized by the Partnership for such equipment.

   The following is a summary of cash excess associated with equipment
dispositions occurring in the years ended December 31, 1999, 1998 and 1997.

                                               1999         1998         1997
                                            ----------   ----------   ----------

Rents earned prior to disposal of
   equipment, net of interest charges       $2,538,399   $1,360,555   $6,304,322

Sale proceeds realized upon disposition
   of equipment                                510,396      135,384    1,041,030
                                            ----------   ----------   ----------

Total cash generated from rents
   and equipment sale proceeds               3,048,795    1,495,939    7,345,352

Original acquisition cost of equipment
   disposed                                  2,081,798      854,679    6,190,551
                                            ----------   ----------   ----------

Excess of total cash generated to cost
   of equipment disposed                    $  966,997   $  641,260   $1,154,801
                                            ==========   ==========   ==========


                                       27
<PAGE>

                            AMERICAN INCOME FUND I-C,
                       a Massachusetts Limited Partnership

            STATEMENT OF CASH AND DISTRIBUTABLE CASH FROM OPERATIONS,
                             SALES AND REFINANCINGS

                      for the year ended December 31, 1999

<TABLE>
<CAPTION>
                                                          Sales and
                                           Operations    Refinancings      Total
                                          -----------    ------------   -----------
<S>                                       <C>            <C>            <C>
Net income                                $   681,660    $   508,592    $ 1,190,252
Add:
   Depreciation                               956,631             --        956,631
   Management fees                            101,040             --        101,040
   Book value of disposed equipment                --          1,804          1,804
Less:
   Principal reduction of notes payable    (1,095,661)            --     (1,095,661)
                                          -----------    -----------    -----------
   Cash from operations, sales and
     refinancings                             643,670        510,396      1,154,066

Less:
   Management fees                           (101,040)            --       (101,040)
                                          -----------    -----------    -----------

   Distributable cash from operations,
     sales and refinancings                   542,630        510,396      1,053,026

Other sources and uses of cash:
   Cash at beginning of year                3,243,631             --      3,243,631
   Net change in receivables and
     accruals                                 308,526             --        308,526

Less:
   Cash distributions paid                   (123,910)      (510,396)      (634,306)
                                          -----------    -----------    -----------

Cash at end of year                       $ 3,970,877    $        --    $ 3,970,877
                                          ===========    ===========    ===========
</TABLE>


                                       28
<PAGE>

                            AMERICAN INCOME FUND I-C,
                       a Massachusetts Limited Partnership

                       SCHEDULE OF COSTS REIMBURSED TO THE
                 GENERAL PARTNER AND ITS AFFILIATES AS REQUIRED
                   BY SECTION 9.4 OF THE AMENDED AND RESTATED
                AGREEMENT AND CERTIFICATE OF LIMITED PARTNERSHIP

                                December 31, 1999

   For the year ended December 31, 1999, the Partnership reimbursed the General
Partner and its Affiliates for the following costs:

   Operating expenses                        $ 341,021


                                       29